Wilmington City Council President Hanifa Shabazz takes part in the listening tour conducted by city officials before evading questions about a $40,000 grant.(Photo: William Bretzger, William Bretzger, The News Journ)

Wilmington City Council President Hanifa Shabazz is requesting a state audit of the council's discretionary fund after she was criticized for giving a $40,000 grant to her predecessor's nonprofit.

“Over the past few weeks, my judgment has been questioned and explaining my decision-making was not providing comfort to citizens or to my fellow council members, so now it is time to take action to clear up any questions that have arisen,” Shabazz said in a statement.

City residents called for an audit on social media and through an online petition after The News Journal reported that the City Council's discretionary fund lacks internal controls and transparency. This environment allowed former Council President Theo Gregory to support a nonprofit he founded with nearly $600,000 over four years, more than any other group.

The system also enabled Shabazz to give $40,000 to a nonprofit run by Gregory. Up to half of that grant went to Gregory's salary, records show.

Only the mayor and the City Council president can request a state audit of city funds. State Auditor Tom Wagner said he got a call from Shabazz requesting the audit after 3 p.m. Thursday.

"I said, 'I will do my best to help the city of Wilmington,'" Wagner said.

Shabazz said Wagner will be invited to review past and present grants "that are in question" during her tenure and the tenure of her predecessors.

“Questioning my judgment and values is one thing, but questioning my integrity and honesty as an elected official is where I draw the line," Shabazz said. “We have so many important issues that need our time and attention, and this matter of discretionary spending was simply taking up too much time.

"Questions have been raised, and those questions need to be answered independently, which is why I have asked the state auditor to assist the council.”

Shabazz said Wagner will begin his work "as soon as possible."

Wagner said he couldn't yet say what the scope of the audit would be but added it would be among his highest priorities.

"I’ll make it a priority because I know the city needs it done," he said.

Concerned residents requested an investigation of the past four years of spending and a review of the discretionary fund's internal controls.

"It's not so much that the recipients of the funds are not worthy," said Midtown Brandywine resident Bob Blanchard, who started a petition this week demanding an audit. "I have no idea who these organizations are. The more important thing is the total lack of any sort of process."

The council's nearly $450,000 annual pot of discretionary funds is spent on what one expert calls "political lubrication" — handouts to nonprofits, charities, civic associations and other groups. Each council member gets $10,000, mostly used for scholarships. The president controls the remaining $327,000.

The council does not limit how much money an organization can receive, does not vote on which organizations get grants and does not require council members to communicate with each other or the public about the grants they give.

Mayor Mike Purzycki said earlier this week that the practice is "rife with risk."

“Hanifa has made the correct decision," the mayor said in a statement Thursday. "Even though there were suggestions that I take action, I did not want to intrude on Council’s business unnecessarily or prematurely.

"As I fully expected, the council president made a good decision in asking that these matters be reviewed as soon as possible. This has been a good lesson for all of us when it comes to managing tax dollars and what we need to do going forward in placing controls on grant expenditures. We should learn from all of this.”

"I regret that the present debate surrounding the process for fund allocations has overshadowed the benefits that Wilmingtonians have long derived from such grants," she said in a statement. "I stand by the support I have given organizations."

City resident Nadine Moone said she is pleased the state auditor is reviewing the system.

"I hope people realize this isn’t a Hanifa Shabazz issue as much as a governing issue in general where structures need to be put in place and adhered to," she said, adding that vitriol directed at Shabazz in recent days was unwarranted.

The council president did not address accusations of political favoritism. Instead, she said the grant to Gregory's nonprofit Student Disabilities Advocate was a way to help Wilmington's youth who need his services.

In her earlier statement, Shabazz said she would support a review by the city auditor. But some residents said that wasn't good enough.

"If we’re attempting to demonstrate complete transparency, having the state auditor come in is preferable," Blanchard said.

Wagner said he could not predict how long the audit would take.

Devon Hynson, executive director of Education Voices Inc., said an audit would show that every dollar he received from the City Council was used to advocate for Wilmington's children. Hynson said Gregory "never got a dime" of the grant money.

Attention on his organization since The News Journal's report has raised questions about the organization's finances. The group never paid the state franchise tax and was voided as a Delaware corporation in 2015, the State Department told The News Journal.

"They’re no longer recognized as a corporation in Delaware," Deputy Secretary of State Kris Knight. "To the extent they’re representing themselves as such, they should not."

Hynson said he was unaware the nonprofit was subject to a franchise tax. And he has been unable to produce the nonprofit's 2015 tax form, as required by law. He said leading Education Voices was his first time running a nonprofit, and he was ignorant of some procedural requirements.

Running a nonprofit operation is "not my gift," Hynson said. His talent, he said, is fiercely representing hundreds of clients who desperately need his knowledge of student rights to get a fair education.

"I made a lot of mistakes," he said Wednesday, tears welling in his eyes. "But I did the job they paid us to do."

With its City Council funding gone, Education Voices is in jeopardy of dissolution, Hynson said. The group did not make a long-term financial plan, and Hynson said he is working without pay.

Stacey Henry, a client of Education Voices, said Hynson helped her 16-year-old daughter by demanding the school system accommodate her special needs. She said to support Hynson is to support hundreds of students in Delaware.

"No one else is doing what this man is doing," she said. "He can quote the law and everyone falls in line. ... You can't put a price on that."

Blanchard said an audit would help give clarity to residents on what their money accomplished.

"It’s not to suggest that anything nefarious was done," he said. "It’s simply to say we looked at all these transactions and here’s what it was used for and here are the results that were generated."

Added Blanchard: "If the government is to restore a modicum of trust from its citizenry, it has to be able to withstand an audit of this type of transaction. ... At the end of the day, it's the taxpayers' money, not a council person's money."